| United States Department of Agriculture |
| Foreign Agricultural Service |
| Circular Series FT-1-97 |
| January 1997 |
World Markets and Trade
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Tobacco: World Markets and Trade |
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This report draws on information from USDA's global network of agricultural attaches and counselors, official statistics of foreign governments, other foreign source materials, and results of office analysis. Estimates of U.S. acreage, yield and production are from the USDA Agricultural Statistics Board, except where noted. This report is based on unrounded data; numbers may not add to totals because of rounding.
The report was prepared by the Tobacco, Cotton and Seeds Division, FAS, AGBOX 1051, 14th and Independence Ave., Washington, DC 20250-1000. Further information may be obtained by writing to the division, or by calling (202) 720-9516, or by FAX (202) 690-1171. The next issue of the tobacco circular will be available electronically after 3:30 pm local time on February 27, 1997
WORLD DEVELOPMENTS
Highlights:
Brazilian cigarette production in 1997 is expected to reach nearly 202 billion pieces, up from 190 billion in 1996. The increase is in response to an expected 11 percent increase in cigarette exports and a 4 percent increase in domestic cigarette consumption. The increase noted in domestic consumption is attributed to an overall increase in consumer disposable income as a result of the Economic Stabilization Plan (the Real Plan) which was introduced in July 1994. Brazilian cigarette exports are forecast to reach nearly 72 billion pieces in 1997, up from 65 billion in 1996. The European Union and Paraguay are by far the leading export markets for Brazilian cigarettes. It is estimated, however, that a significant percent of the cigarette exports Paraguay make their way back into Brazil as contraband.
Auction Reports: Through the 44th sale day of the 1996/97 Canadian flue-cured tobacco marketing season, the Ontario Flue-Cured Tobacco Growers Marketing Board reports that 28,951 metric tons of flue-cured tobacco have been sold so far this year. This represents an 11 percent increase in sales when compared to a similar period of last year's marketing season. Prices in Canadian currency so far this year are averaging $3.85 (US$2.89) per kilogram, up nearly 6 percent from last year, with sales of "A" graded leaves accounting for 71 percent of purchases, down from 74 percent last year.
U.S. DEVELOPMENTS
Highlights:
The U.S. Department of Agriculture announced on January 15th, that the U.S. cigarette manufacturers' purchase intentions for the 1997 burley crop total 473.5 million pounds (farm-sales-weight). Major domestic cigarette manufacturers are required by statute to report annually to USDA their intended purchases of burley tobacco from U.S. auction markets and producers. Data on intended purchases, along with average annual burley exports for the preceding three years and the amount of tobacco needed to attain reserve stock levels, are used to determine the annual burley tobacco marketing quota.
Through the 24th sale day of the 1996/97 U.S. burley and dark tobacco auction season, total gross sales of U.S. burley tobacco (type 31) reached 241,601 metric tons, up 9 percent from last year when 221,912 tons were sold during the same 24 day period. Prices for type 31 are averaging $4.24 per kilogram so far this year, up 15 cents per kilogram from last year. So far this year no type 31 tobacco has gone under loan. Sales of Virginia fire-cured (type 21), eastern district fire-cured (type 22), one sucker (type 35), and Virginia sun-cured (type 37) tobaccos are reported to be higher so far this year. Sales of western district fire-cured (type 23) tobacco is lower, and greenriver (type 36) sales are unchanged from last year. Prices are averaging higher in all markets so far this year when compared to last year, while loan take is lower.
U.S. TRADE SUMMARY FOR JANUARY-NOVEMBER 1996
U.S. unmanufactured tobacco exports for January-November 1996 totaled 200,514 metric tons, valued at $1.27 billion, representing a 7 percent increase in quantity and a 1 percent increase in value when compared to the first eleven months of 1995. The leading U.S. leaf export markets during the January-November 1996 period were: Japan, 33,749 tons; Germany, 25,132 tons; the Netherlands, 17,600 tons; Belgium/Luxembourg, 16,063; the United Kingdom, 15,459 tons; and Turkey, 15,298 tons.
Flue-cured exports in January-November 1996 reached 101,841 tons, valued at $714.8 million, with both quantity and value down 6 percent from the same period in 1995. The leading U.S. flue-cured export markets in January-November were: Japan, 21,959 tons; Germany, 13,836 tons; the United Kingdom, 9,647 tons; Turkey, 8,338 tons; Belgium/Luxembourg, 6,598 tons; and South Korea, 6,552 tons.
Burley exports for January-November 1996 totaled 45,884 tons, valued at $346.1 million, up 4 percent in quantity and 1 percent in value from the same period in 1995. The leading U.S. burley export markets for the first eleven months in 1996 were: Germany, 9,520 tons; the Netherlands, 7,242 tons; Thailand, 4,144 tons; Belgium/Luxembourg, 3,776 tons; and Japan, 3,189 tons.
U.S. cigarette exports for January-November 1996 totaled 224.46 billion pieces, valued at $4.38 billion, up 6 percent in quantity and down slightly in value relative to the same period in 1995. The leading U.S. cigarette export markets so far in 1996 are: Japan, 62.62 billion pieces; Belgium/Luxembourg, 57.78 billion pieces (much of which is re-exported); the Russian Federation, 15.47 billion pieces; Lebanon, 10.74 billion pieces; Saudi Arabia 8.56 billion pieces; and Cyprus, 8.02 billion pieces.
U.S. exports of bulk smoking tobacco in January-November 1996 totaled 45,509 tons, valued at $349.0 million, up 20 percent in quantity and up 18 percent in value from 1995. The leading export markets so far in 1996 are: Turkey, 8,281 tons; Spain, 7,522 tons; Belgium/Luxembourg, 7,038 tons; and the Netherlands, 4,304 tons.
U.S. unmanufactured tobacco imports for consumption (duty paid) in January-November 1996 totaled 278,733 tons, valued at $855.8 million, reflecting nearly 59 percent increase in quantity and 67 percent in value when compared to January-November 1995. Imports of oriental tobacco, the leading tobacco type imported by the United States, reached 79,982 tons, valued at $335.1 million during the first eleven months of 1996. Reflecting a 6 percent decrease in quantity and a 7 percent increase in value when compared to January-November 1995. Flue-cured imports for the first eleven months of 1996 totaled 56,234 tons, valued at $226.7 million, up more than two-fold in quantity and value from January-November 1995. Burley imports so far in 1996 reached 53,168 tons, valued at $197.6 million, up more than three-fold in quantity and up more than four-fold in value from the same period in 1995. U.S. imports of stems and scrap tobacco so far in 1996 totaled 60,610 tons, valued at $25.8 million, up more than three-fold in quantity and more than two-fold in value from January-November 1995. The leading suppliers of unmanufactured tobacco imports for consumption so far in 1996 are: Brazil, 79,319 tons; Turkey, 66,641 tons; Argentina, 22,126 tons; Malawi, 15,588 tons; Thailand, 14,667 tons; Greece, 12,026 tons; and Zimbabwe, 8,027 tons.
U.S. general imports (actual arrivals) of unmanufactured tobacco for the first eleven months of 1996 totaled 302,935 tons, valued at $970.3 million. This represents a 78 percent increase in quantity and more than a two-fold increase in value from January-November 1995.
SPECIAL REPORT
1997 Tobacco Outlook for Selected Countries
The information presented in this section is based on Foreign Agricultural Service reports received from the subject countries during late 1996. This information provides an indication of production, trade, and consumption trends for 1997. All production data presented is measured on a dry-weight basis unless otherwise indicated.
Argentina:
Argentina's leaf output is forecast to reach 97,000
tons in 1997, an increase of nearly 26 percent from 1996.
Production of flue-cured tobacco, the leading type grown in
Argentina, is expected to jump 24 percent to 62,000 tons, while
burley output should increase 36 percent to 26,500 tons. Total
leaf plantings are expected to increase nearly 15 percent in 1997
due to strong grower returns last year and an expected
strengthening in the foreign demand for Argentine leaf in 1997
due to favorable prices. Argentina is expected to export 60,000
tons of unmanufactured tobacco in 1997, up about 25 percent from
the 48,000 tons exported in 1996. Flue-cured tobacco is the
leading tobacco type exported by Argentina. For 1997, flue-cured
exports are likely to reach 40,000 tons, up 25 percent over 1996.
Burley exports are expected to reach 15,000 tons this year, an
increase of 36 percent over 1996. Argentina's leading export
markets for leaf tobacco in 1995 were the United Kingdom (18,771
tons); the United States (14,345 tons), Germany (10,461 tons);
Belgium (10,037 tons); and France (10,001 tons). Argentina is not
a significant leaf importer. For 1997, imports are expected to
total 3,000 tons, down nearly 52 percent from last year due to
increased production levels in 1997.
Brazil:
Brazil's production of total unmanufactured tobacco is expected to reach 429,500 tons in 1997, up about 17 percent from 1996. Much of the rise in output stems from increased plantings due to industry expectations that foreign demand for Brazilian leaf will be higher in 1997 and that cigarette production for export will also increase. Yields are also forecast to rise in 1997 as favorable weather conditions which have prevailed early in the growing season are expected to continue. Flue-cured tobacco is the leading tobacco type grown in Brazil. Flue-cured output in 1997 is expected to increase by over 44,000 tons from last year, reaching 317,000 tons. Burley output is forecast to increase by over 14,000 tons, reaching 74,000 tons. Brazil's total leaf exports in 1997 are expected to reach nearly 273,000 tons, up almost 9 percent from 1996. Brazil's export prices for the 1997 season are expected to be attractive to foreign buyers. The European Union and the United States are by far Brazil's leading leaf export markets. Other export markets for Brazilian leaf include Japan, the Philippines, and South American markets. In 1997, Brazil is expected to import about 7,000 tons of leaf tobacco, much of which is dark air-cured and dark sun-cured tobaccos. Suppliers of Brazil's leaf imports include the European Union, Argentina, and Zimbabwe.
China: China's 1997 tobacco production is forecast at 2.29 million tons, up 2 percent from 2.25 million tons produced in 1996. Most of China's tobacco production is flue-cured. The tobacco monopoly's policy of discouraging the production of lower quality tobacco is still in effect. Procurement prices and incentives are used to influence the market and move tobacco production to the desired location. This includes an effort to locate tobacco production away from the fertile Yellow River Valley provinces.
In 1996, official Chinese reports suggested that the anti-smoking campaign had lowered actual smoking. News reports from the southern city of Guangzhou indicate that consumption has dropped drastically (almost 40 percent) and that there is an increase in anti-smoking sentiment. However, reports from other cities, such as Beijing and Shanghai, do not indicate declines in consumption or increases in anti-smoking sentiment. In Beijing, 60 percent of males between the ages of 20 and 40 years of age smoke.
Cigarette production is projected to increase slightly, approximately 2 percent, in 1997. Tobacco use for cigarette production is also projected to climb 2 percent from 2.22 million tons in 1996 to 2.26 in 1997. Most of China's cigarette production will be consumed domestically.
Tobacco stocks are down from previous years and are expected to continue their decline. Ending stocks are estimated at 1.38 million tons in 1996 and are expected to decline to 1.36 million tons in 1997. Exports are expected to be up slightly from 58,000 tons in 1996 to 60,000 tons in 1997, just over a 3 percent increase. Imports are expected to be down over 28 percent, from 21,000 tons in 1996 to 15,000 tons in 1997.
Mexico:
Total unmanufactured tobacco output in 1997 is expected to reach about 44,000 tons, relatively unchanged from 1996, and about 8 percent higher than in 1995. The Mexican tobacco industry is expected to rebound slightly as Mexico's economy shows signs of improving. The domestic cigarette market is likely to show moderate growth in the short-term which is expected to push the demand for leaf by domestic cigarette manufacturers higher in 1997. Production of burley tobacco, the leading type grown in Mexico, is expected to total 24,800 tons in 1997, up 6 percent from last year. Flue-cured production is projected to reach 6,900 tons, down about 4 percent than in 1996. Mexico's leaf exports, which are nearly all burley type tobaccos, are forecast to remain at 13,000 tons in 1997, about the same level as in 1996. Mexico's leaf exports improved in 1996 as the late 1994 devaluation of the Mexican peso kept Mexican leaf competitive on the international market. The United States is Mexico's leading export market for burley tobacco. Mexico's leaf imports are projected to total about 3,000 tons in 1997, unchanged from 1996. The relatively low level of imports can be attributed to ample domestic supplies of sufficient quality tobaccos for domestic use.
Zimbabwe:
In 1997 flue-cured tobacco production is expected to continue its increase. Flue-cured production has increased steadily since 1994. Production in 1997 is forecast at 203,237 tons, up almost 17 percent from 1996 production of 173,938 tons. In general, in the 1995/96 season, the summer rainfall was abundant and widespread and led to plenty of water for irrigation throughout the growing season, leading to a high quality product. The quality of the crop and tight world supplies, resulted in strong prices during 1996 and are expected to provide a strong incentive to increase planted area this year.
Total tobacco production is forecast to rebounded after a decline in 1996. Production in 1997 is forecast to increase more than 17 percent from 178,595 in 1996 to 209,272 in 1997. The previous year's decline in total production is attributable to production problems with burley tobacco. Production of burley dropped almost 40 percent in 1996 to 4,632 tons. The drop in production is due, at least in part, to poor prices, the lack of a local auction, and difficulty getting seed in time for planting. The new auction in northern Zimbabwe is finished, opened at the end of the marketing year, and should be open for the next marketing year providing better marketing opportunities for farmers. Additionally, a "seedbed scheme" developed to encourage planting of burley will be expanded for the 1997 marketing year. Thus, burley production for 1997 is forecast to increase almost 30 percent to 6,000 tons.
Prepared By: Pete W. Burr, and Kevin Latner, Cotton, Oilseeds, Tobacco, and Seeds Division, FAS, USDA. (202)720-9497
U.S. TOBACCO TRADE, 1995-1996
NOVEMBER JAN-NOV JAN-DEC
1995 1996 1995 1996 1995 1996
EXPORTS:
UNMANUFACTURED TOBACCO
MT 21,965 24,293 187,791 200,514 209,482 215,000
$,000 151,928 160,391 1,259,271 1,274,834 1,399,863 1,355,575
$/MT 6,917 6,602 6,706 6,358 6,682 6,305
BULK SMOKING TOBACCO
MT 3,110 5,931 37,849 45,509 41,618 48,000
$,000 27,153 35,817 295,589 348,970 325,567 376,800
$/MT 8,731 6,039 7,810 7,668 7,823 7,850
CIGARETTES
Mill P 21,381 19,312 211,389 224,458 231,100 245,000
$,000 435,327 382,001 4,375,563 4,375,169 4,769,944 4,772,000
IMPORTS:
LEAF IMPORTS FOR CONSUMPTION
MT 23,479 13,639 174,999 278,733 190,291 300,000
$,000 69,469 41,064 512,141 855,781 550,136 900,000
$/MT 2,959 3,011 2,927 3,070 2,891 3,000
LEAF GENERAL IMPORTS
MT 18,695 18,900 170,524 302,935 199,088 330,000
$,000 53,821 67,009 471,397 970,326 554,658 1,031,250
$/MT 2,879 3,545 2,764 3,203 2,786 3,125
LEAF IMPORTS FROM CBI:
METRIC TONS
CON. 1,521 1,483 6,428 12,141 7,225 12,500
GEN. 1,455 1,649 6,195 11,863 6,739 12,500
1/ Forecast
2/ Caribbean Basin Initiative (CBI) countries include: Antigua and Barbuda, Bahamas, Barbados, Belize, British Virgin Islands, Costa Rica, Dominica, Dominican Republic, El Salvador,Grenada, Guatemala, Haiti, Honduras, Jamaica, Montserrat, Netherland Antilles, St. Christopher-Nevis, St. Lucia, St. Vincent, Grenadines, Trinidad & Tobago, Panama, and Guyana.
NOTE: DUE TO DATA AGGREGATION, ROUNDING ERRORS MAY OCCUR. SOURCE: COMPILED FROM BUREAU OF THE CENSUS RECORDS. PREPARED BY USDA/FAS/TCSD JANUARY 1997
TARIFF-RATE-QUOTA UPDATE
U.S. Tobacco Imports Subject to Tariff-Rate-Quota 1/
September 13, 1996 Through December 31, 1996 Metric Tons Quota 1996/97 Imports Percent of Recipients Quota to Date TRQ Used Argentina 12,000 3,741 31.2% Brazil 80,200 10,607 13.2% Chile 2,750 618 22.5% European Union 10,000 117 1.2% Guatemala 8,875 1,155 13.0% Malawi 12,000 5,477 45.6% Philippines 3,000 0 0.0% Thailand 7,000 336 4.8% Zimbabwe 12,000 1,734 14.5% Residual 2/ 3,000 3,000 100.0% Total 150,825 26,785 17.8%
1/ U.S. Tariff Schedule line items subject to the TRQ include flue-cured and light air-cured tobacco, including burley, which are used in the manufacturing of cigarettes for consumption in the United States.
2/ A TRQ of 3,000 metric tons is available to all countries, other than the 9 designated quota recipient countries, and is allocated on a first come/first served basis.
NOTE: The TRQ is administered on a Sep. 13 - Sep. 12 year.
SOURCE: U.S. Customs Service. JANUARY 1997
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